In June 2013, WSE strengthened its presence in London by appointing the Exchange’s standing representative who works to enhance acquisitions on that market.

Building the international importance and reputation of the Polish exchange is part of WSE’s growth strategy. The implementation of the strategy aiming to strengthen the international position of WSE results in a growing number of foreign issuers, brokers and investors.

In June 2013, WSE strengthened its presence in London by appointing the Exchange’s standing representative who works to enhance acquisitions on that market, especially the acquisition of new investors and Exchange Members. Since 2008, WSE has operated a representative office in Kiev (Ukraine).

In August 2013, WSE signed an agreement to acquire a 30% interest in Aquis Exchange Ltd., a multilateral trading facility which will operate trading in shares in 14 European countries (as at the date of publication of the Report, Aquis Exchange offers trade in German, UK, Dutch and French stocks). The goal of the investment was to diversify further the sources of the WSE’s revenue and to largely fortify the brand and position of the Exchange on the international financial markets including continued improvement of the role of WSE as the dominant financial hub in the CEE Region.

On 20 November 2013, the General Assembly of the Federation of European Securities Exchanges (FESE) appointed Adam Maciejewski, President of the Management Board of Warsaw Stock Exchange, to the Board of FESE. The FESE Board is the second management authority of FESE after the General Assembly. The Board is composed of maximum 12 members appointed for a term of three years by the General Assembly. The statutory responsibilities of the Board are to set the direction of the policy and define the overall strategy of the organisation, including tabling of recommendations to the General Assembly, as well as to implement and regularly monitor the implementation of the FESE Action Plan which defines the key priorities of the organisation. Warsaw Stock Exchange has co-operated with FESE since 1992, was granted the status of associated member in 1999, and has been a full member of FESE since June 2004. FESE represents 41 exchanges which organise trading in equities, bonds, derivatives and commodities through 21 full members from 30 countries as well as 2 non-European observer members.

Development of a Network of Foreign Investment Firms – Exchange Members

Thanks to acquisition, participation in international conferences, own conferences organised in the world’s main financial centres and international road shows, WSE proactively promotes the Polish capital market among global investors and financial intermediaries. The efforts of WSE focus on attracting domestic and foreign exchange members. These are mainly international investment banks as well as regional financial intermediaries, which are increasingly interested to get access to the WSE trading system as more companies from the Region are listed on the trading floor in Warsaw.

The Exchange 57 members, including 31 local and 26 remote members, at the end of 2013.¹ The share of remote members in session trading in shares was ca. 22.3% in 2013 compared to ca. 11% in 2012.²

Foreign (local and remote) Exchange Members are companies from many European countries. Remote membership allows foreign brokers to have direct access to the WSE system without physical presence in Poland and without the intermediation of local brokers. At the end of 2013, this solution was used by intermediaries from Austria, Bulgaria, Cyprus, Czech Republic, France, Germany, Hungary, Lithuania, Netherlands, Slovakia, Sweden and UK.

Share of local and remote WSE members in session trading in shares on the Main Market

According to WSE research, foreign investors generated 47% of turnover in 2013, modestly less (1 percentage point) than in 2012.

Investors’ share in turnover on the Main Market in shares

Foreign investors’ activity on the futures market in 2013 remained stable at 17%. However, their share in option trading increased significantly (by 6 percentage points). The volume of turnover generated by foreign investors amounted to 270 thousand options in 2013, an increase of 85% in comparison with the volume of over 145 thousand options in 2012.

Investors’ share in turnover on the futures market

Investors’ share in turnover on the option market

Attracting Foreign Issuers

The Group aims at strengthening its position of the regional financial hub through focusing its marketing activities on companies from the CEE Region. In the Company’s opinion, WSE has competitive advantages over other stock exchanges in the Region which include, among others: a recognisable brand, a reliable trading system, quality of transactions performed, market liquidity, market environment protecting interests of investors and facilitating access for foreign investors and brokers, and access of issuers to a diversified base of domestic and international investors.

In its proprietary Program WSE IPO Partner, WSE works together with a network of foreign banks, brokerage houses and other intermediaries with a view to promoting the Polish capital market abroad, which materially enhances WSE’s possibilities of approaching a bigger group of issuers and market participants. As at 31 December 2013, the WSE IPO Partner program covered 24 entities from 9 countries.

As at 31 December 2013, the markets operated by the Exchange listed shares of 57 foreign companies, including 11 companies listed on NewConnect, with total capitalisation of nearly PLN 248 billion. The share of foreign companies in total session trading in shares on the Main Market was 2.6% in 2013 as compared to 2.8% in 2012. Initiatives aiming to improve the liquidity of trading in shares of foreign companies are, next to attracting foreign issuers, a priority of WSE in the context of the Company’s international activities. This goal is pursued among others by promoting good practice and top standards of investor relations among foreign companies and by organising conferences where foreign issuers meet with managers of asset management companies which invest on WSE.

Foreign companies now listed on WSE come from 23 countries, mainly Ukraine (12 issuers) and the Czech Republic (8 issuers). 24 companies are dual-listed while 33 companies are single-listed on WSE.

Commodity Market

PolPX participates in the work of the Association of European Energy Exchanges EUROPEX where it co-operates and exchanges information with other exchanges and stakeholders in building a single European energy market. In December 2013, PolPX President was elected for a term of two years to the EUROPEX Board which consists of seven members.

Regulatory environment

The strategic programs and action plans of PolPX correspond to the implementing measures proposed by the European Commission and the European Council for the European internal electricity market and regional markets. The Agency for Co-operation of Energy Regulators (ACER) created in March 2011 together with National Energy Regulators is initiating changes in the national market models.

The European Commission and the European Council have confirmed the expected target date of the internal energy market to be opened by the end of 2014. Integration will be implemented at the regional level to be followed by supra-regional integration. The goal of the implementation of the European market is to enhance the cross-border capacity of energy exchange, maximise social welfare for the participants by rationalising the cost of production and purchase and price convergence, as well as create regional and EU-wide synergies of services ensuring energy security.

PolPX is actively engaged in projects, adjusts its technical infrastructure to market needs by improving the algorithms of existing IT systems, and negotiates with licensors and owners of IT systems which allow to create a European market.

PolPX initiatives building the Internal Electricity Market (IEM)

PolPX co-operates with the Energy Regulatory Office (URE) and the Transmission Grid Operator PSE on an international scale in the preparatory work for the creation of a single European market in the area of day-ahead and intra-day electricity markets together with the stakeholders of the CEE, CWE and NWE regional markets in the following projects:

• Price Coupling of Regions (PCR) – day-ahead market;
• CEE regional market project – day-ahead market;
• project connecting the Polish market to the day-ahead market of three exchanges (Czech, Slovak, and Hungarian) opened in September 2012;
• Cross-border Intraday (XBID) project – intra-day market;
• co-operation with the Scandinavian exchange Nord Pool Spot (NPS) – day-ahead market opened in December 2010 and intra-day market to be opened.

The costs of PolPX’s participation in the projects of building the regional markets and the European market may be refinanced according to preliminary approval of the President of the Energy Regulatory Office. For the energy exchange, these include the implementation costs (participation in costs already incurred by Western European exchanges), investment costs (computer hardware and software) and current and future operating costs (service fees, the cost of market systems operated by exchanges).